Avoid Disaster: Have Your Contracts Reviewed (guest post)

Today, we have a guest post by on of my comrades in crime (that is, a fellow construction law blogger), Chris Hill.  Here’s his official bio:  Christopher G. Hill, LEED AP is Virginia Supreme Court certified mediator, construction lawyer and owner of the Richmond, VA firm, The Law Office of Christopher G. Hill, PC.  Chris authors the Construction Law Musings blog where he discusses legal and policy issues relevant to construction professionals.  His practice concentrates on mechanic’s liens, contract review and consulting, occupational safety issues (VOSH and OSHA), and risk management for construction professionals.

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Chris Hill, AttorneyFirst of all, thanks again to Melissa for letting me post at her fine blog.  She’s one of the more knowledgeable and cool Tarheels I know (and this is coming from a Blue Devil!).  Now, on with the show.

As those who read my Construction Law Musings blog on a regular basis know, I am a huge proponent of getting a knowledgeable attorney involved in your construction contracting business early on.  While we construction lawyers are generally seen as last resorts, we can actually be helpful and (dare I even say it?) save you money.  How, you may ask, can paying a construction lawyer that ostensibly is only there when you have a claim actually save you money?  Well, as you may have gathered by the title of this guest post, I’m going to tell you.

Two words:  Disaster avoidance.

Litigation is a money, time and emotion draining process for those that don’t have the particular odd propensity of the litigator that makes them actually enjoy trials.  Litigation takes money from the bottom line because no business this side of a cigarette or pharmaceutical company can do business planning to sue or be sued.  For that reason, litigation cannot be treated as overhead and even in the case where you could get a judgment for any fees that you may spend, you are still out the cash and even then may never recover on the judgment.  A contractor cannot make money through litigation (at least in my experience).

Even in the case where you are “right” and “should never lose” there is risk in court.  Juries, arbitrators and judges sometimes go the other way.  These are humans.  They are fallible and in many ways unpredictable.  Litigation is (and should be) a last resort.

The best way to avoid this result is a good contract and good advice from those of us who have seen the results of litigation on numerous occasions and that therefore know how to avoid it.  Everything from the proper claim and notice procedures to a well scoped project are necessities up front.  Aside from the “common sense” issues that you as a business person will see coming, an attorney can see the picky “traps” that are there and are counterintuitive.  For instance, Virginia, unlike many other states, allows the waiver of mechanic’s lien rights in a contract.  You wouldn’t want to miss this thinking that you “knew” that such a clause was unenforceable.  [Editor's Note: By comparison, in NC, such a waiver in advance is against public policy].

Much like your bi-annual visits to the dentist (yes, I compared my profession to one that is almost as popular), the relatively small expense of early review of your contracts and business practices can go a long way toward avoiding surprises and disastrous expenses later.  In short, and as you learned in kindergarten, doing it right the first time is always easier than fixing the problem later.

My final advice:  Add a lawyer to your team of advisers, you’ll be glad you did.

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Thanks, Chris, for another fine post.  And I completely agree:  the number of hours spent on claims will vastly supersede the small cost for most companies/Firms to properly prepare and vet their contracts and proposalsChris and I welcome your comments, questions, and thoughts!

 

When Running a Project, Don’t Think Like an Architect! (guest post)(Tue Tip)

Today, we welcome back Christopher G. Hill as guest author.  Chris is a LEED AP, Virginia Supreme Court certified mediator, lawyer and owner of the Richmond, VA firm, The Law Office of Christopher G. Hill, PC. Chris has been nominated and elected by his peers to Virginia’s Legal Elite in the Construction Law category on multiple occasions and is a member of the Virginia Super Lawyers “Rising Stars” for 2011 and 2012. He concentrates his practice on mechanic’s liens, contract review and consulting, occupational safety issues (VOSH and OSHA), and risk management for construction professionals.  

Chris authors the Construction Law Musings blog where he discusses legal and policy issues relevant to construction professionals. Additionally, Chris is active in the Associated General Contractors of Virginia and the Board of Governors of Construction Law and Public Contracts Section of the Virginia State Bar.  Most importantly, Chris’ blog was a personal inspiration to me as I set about my own blog back in 2009.  Welcome Chris!

Chris Hill
First and foremost, thanks to my pal Melissa for the opportunity to post here at her great blog.

Now that the formalities are out of the way, I will explain the title of this guest offering.  When Melissa first contacted me for my thoughts on poor project management from the contractor’s perspective, my first thought on how to avoid causing friction was “Don’t think like an architect.”

Before you flip the switch and head off for another post, possibly even another blog, hear me out.  Yes, I know that much of the audience for this piece is likely to be architects and other design professionals.  Yes, I know that all of you try hard.  But no, not all of you can run a job smoothly when acting as an Owner’s representative on a project (as opposed to designing a great building).  I’m here to help with my “musings” (see how I did that?) gained from years of representing the folks that you all seem to think are trying to ruin a project:  contractors and subcontractors.

The main thing that both “sides” of this equation need to remember is that you are all in this together.  Without your approval, the GC (and by extension the subcontractors and suppliers) on the project won’t get paid.  Without the GC and its cohorts, you, the architect, will have to listen to an Owner complain about the pace of the project and the fact that you aren’t running the project how that Owner wants it run.  See? All of us are in the same boat.

Failing to row in the same direction (to continue to beat this metaphor over the head) as the GC and seeing the GC as one that seeks to undermine your beautiful and artistic design sensibilities can only undermine those sensibilities.  GC’s and subcontractors, if asked nicely early on, can give you great insights into the scheduling, proper materials, and even the best and most efficient building design.

For example, an HVAC subcontractor can help you with the ductwork design in the beginning so that later on you aren’t barking at the GC because the subcontractor requested a change order (now waiting on your desk for approval) due to the fact that a load bearing wall would have to be moved in order for the ducts to go where you wanted them.  This minor bit of early discussion avoids the issue and keeps the GC and its subs happy, keeps the project on track and avoids messy things like liens and bond claims.

Failure to consult early and often, in a cooperative manner, leads to grumpy GC’s, ticked off subs, and a project that slows to a glacial pace.  This keeps everyone, including you, from being paid.

I could continue to rant, but you are smart folks.  You can do all of that engineering type math and all of that geometry and work with CAD that I decided was too hard so I went to law school.  You get the point: you and those that perform the construction at your project are not adversaries.  Yes, you represent the owner and want to make sure that the building is built right.  However, the best way to do this is to consult early and often.  Free information flow is the best way to keep everyone happy and everyone paid.

Thanks again to Melissa for letting me rant.

Thanks, Chris.  Ranting with a purpose is always welcome on my blog!  Readers, it is your turn.  Questions, comments, or rants for Chris or me?  Comment below.

Mine is better than yours! Battle of the experts in the construction lawsuit (Law & Order: Hard Hat files Part 6)

battling deerEventually, most construction lawsuits of any size involve hiring experts to review the project.  These experts then usually issue an opinion as to whether or not you, as the design professional, violated the professional standard of care for architects or engineers working on a similar project in a similar community.

If the case proceeds to trial, all sides will have their own expert(s), with rare exceptions.  Thus, the “battle of the experts” begins.  That is, a jury will have to listen to your expert, their expert, and the juror’s own common sense, and try to make out who is correct.  As with most things, there are probably valid points made by all of the hired experts (that is, of all the reputable ones, at any rate).  If a case gets to trial, you can be sure of it.

Hiring an expert to support your position can be a scary prospect.  You will essentially be paying (or having your insurance carrier pay) to have a competitor look over all of your work with a fine-tooth comb and 20/20 hindsight, to see if he can concur that your design met the standard of care.  Your attorney should work with you to get a good, solid professional peer retained as your expert; however, if you have any suggestions of who to use (or, who you do *not* wish to use), make those opinions known.  It is important to hire someone who is impartial about the outcome of the case, but you will not be required to hire your worst enemy/competitor.

Another protection that is built into litigation, is whether or not the expert’s opinion will ever see the light of day.  If the expert cannot support your position, he will be designated a “consulting expert” and his opinions will remain only between you, your lawyer, and the expert.  Assuming the expert does support your position, he will be designated as a “testifying expert,” at which point the other side can look at his records and notes, read any written reports he generates, and take his deposition.

Hiring an expert doesn’t have to be an arduous process, but work with your lawyer to get someone you respect on your side of courtroom.

Questions? Comments?  Share your experience with experts, or being an expert, in the comments section below.  And don’t forget to sign up for the Construction Professional newsletter and my free white paper on 7 Critical Mistakes, on the right hand side of the homepage.

Photo (c) Sias van Schalkwyk

 

 

 

You have the right to an attorney (but one will not be appointed for your construction lawsuit) (Law & Order: Hard Hat files Part 3)

lawyerEvery criminal worth his salt knows that he has the right to an attorney.  What about in construction law?  Not so much.  You do have the *right* to an attorney; however, you do not get one for free.  Do you *need* an attorney?  Not necessarily.  Then again, I prefer not to pull my own bad teeth, but hire a professional to do it for me.  Maybe you prefer the string-tied-to-a-doorknob method.  Not me.

In some situations, actually, you *do* need an attorney.  Any natural person can represent himself in court, fool or not.  However, if your company or professional association is sued, a company employee cannot represent that company pro se. That is, unless you have a licensed attorney on staff, you must hire a lawyer to represent your company.

There are two general ways that attorneys can be retained to defend you in the construction lawsuit—either your insurance carrier can hire them, or you can.  This is one of many, many reasons to have errors & omissions insurance.

If you have E&O insurance and are sued for professional malpractice or negligence, then your attorney will be hired and paid for by the insurance company.  You simply report the claim to your agent, and the insurance company will tell you who it has hired to represent you.  Nice, yes?

If you do not have insurance, then you must hire your own attorney.  How do you figure out who to hire?  The simple answer, of course, is to simply hire me! (kidding).  You will want to do some due diligence – ask for referrals, find out what types of attorneys in your area handle construction disputes, and talk with some potential attorneys.  Important questions to consider include:

  • Experience in construction disputes.  You don’t want a personal injury attorney who “dabbles” in construction – you want someone who does a lot of it.  In some states, there may be special certifications of construction lawyers; however, in North Carolina there is not any such designation at this time.  But the attorney should make construction law a regular part of his/her practice.

 

  • Knowledge of the design professional’s role.  Some lawyers and law firms mostly represent subcontractors in lien claims.  Others represent owners & bankers.  Some focus on general contractors.  And yes, others (including yours truly) tend to represent design professionals.  All things being equal, it is helpful to have someone in your corner who understands your industry, your industry’s jargon, and your industry’s practices.

 

  • Defense mindset.  Often, if you have found someone who meets the first two criteria, you will have found someone that has a defense mindset.  However, this is not always the case.  Some lawyers and firms tend to consider themselves plaintiff’s law firms; others consider themselves defense law firms.  If you have been sued, you obviously want someone who is of the defense mindset.  You can usually tell who these lawyers are based on their affiliations—for example, they tend to be members of their state civil defense attorneys network (in NC, the NC Association of Defense Attorneys), or they are members of a national network such as the Defense Research Institute.  In contrast, a plaintiff’s attorney will more likely be a member of the Academy of Trial Lawyers, Advocates for Justice, or the like.

If you already have a lawyer who you feel confident in, and who is qualified, can you get your insurance company to pay for him/her to defend you?  Sometimes.   You usually have some say in who is retained to represent you—for example, the right to request new counsel if you don’t like “the buffoon” they hired on your behalf.

If you have a lawyer preference, you can ask (but not demand) that the insurance company retain your lawyer in the lawsuit against you.  Your lawyer may need to agree to certain compensation, reporting, and other rules to be considered by the insurance company.  After all, they will be footing the bill.

Sometimes, you may find that your preferred attorney is already on the “qualifying” or “panel” counsel list of the insurance company, which makes it easy, and much more likely, that the insurance company will grant your request.  Remember, though, Jack McCoy and Lennie Briscoe didn’t ask to get to work together, they were just assigned to do so.  So it may be with you.  Regardless of who is your lawyer, read (or re-read) this excellent article on how to be an effective construction client.

Regardless of who represents you and/or your company, keep in mind that your attorney is your attorney, regardless of who is paying.  Anything you say to your lawyer must be held in confidence, and your lawyer is there to represent your interests.  Be honest with your lawyer, respond to his/her communications promptly, and work together.  Construction lawsuits are usually messy, but at least there is no funeral to deal with!

Next week in the series: Paperwork, and more Paperwork….Discovery in the construction lawsuit. Be sure to bookmark the blog, or sign up for email or the RSS feed, because you won’t want to miss any blog posts.

Photo (c) Dawn Hudson

The police are at the door! Service of the construction lawsuit on your company (Law & Order: Hard Hat files Part 2)

sheriff carThe police?  Yes, that’s right.  If you are sued, at least in North Carolina, you may find Mr. Policeman (or Ms. Policewoman) at your door.  There are several ways that you may find out you or your company are being sued, but undoubtedly seeing the Sheriff at the door is the most nerve-racking.  Heck, we have Sheriffs in our law office occasionally to serve papers, and the sight never fails to startle me.  So be forewarned—the first you find out that there is a lawsuit may be when Johnny Law himself comes knocking.

While unnerving (as it is often meant to be by the party suing you), rest assured that all the Sheriff will be doing is identifying you and handing you papers showing you’ve been sued.  The Sheriff doesn’t actually have to hand you the papers personally- in fact, depending on if and how you are incorporated, he may be handing them to your spouse, another adult that resides in your house, your business partner, or an officer or manager of your professional association.  While the Sheriff is not supposed to leave papers with a mere employee, that can and does happen as well.

The Sheriff is not the only way you can be sued.  You can also get a certified mail package—you know, the type that requires you to go sign for it at the post office.  Or, you may get a Fed Ex package.  If you are being sued in federal court, or you know the lawsuit is coming, you may not get anything, as it may all come to your lawyer instead.

What should you do if you do get the lawsuit (called the Complaint)?  First, run, do not walk, to your insurance carrier and/or lawyer.  Do not pass go.  This should be the first thing you do.  If you don’t have a lawyer, but you have insurance, your agent should be able to help you report the claim, and a lawyer will be assigned to you by the insurance company.  If you have a lawyer, you can report to him/her, and ask the lawyer to make the claim on your behalf to your insurance company.

Remember, however, that you need to report it as soon as you can.  In state actions in North Carolina, you have 30 days from receipt to respond.  In federal actions, you have 20 days.  There are certain rules concerning weekends and governmental holidays that change these deadlines at times.  But the important thing to remember is that you must respond, timely, or you can end up with a judgment entered against you in default.  So, when you report the lawsuit, the first thing your agent or lawyer will want to know is the date you (or someone connected with you) first received the Complaint.

If you report the claim and do not hear back?  Follow up.  Never assume that an email went through or that the person you called isn’t on vacation or in the hospital.  Make sure that you speak with your agent and/or lawyer personally and that they know when you were served.

Questions? Comments?  Have you ever been sued?  Do you now know something you wish you knew then?  Drop me a line or comment below.

Next week in our series:  You have the right to an attorney! (but one will not be appointed for your construction lawsuit)

Photo (c) freefoto.com

 

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